RICHMOND — Virginia Gov. Tim Kaine said yesterday that he will terminate employees and eliminate jobs and wants to use a mix of cutbacks and savings to help reduce a budget shortfall projected to reach $641 million by next summer.
The cuts include eliminating internships, firing 74 state employees and ending 386 jobs through attrition.
Mr. Kaine hopes to use unspent money from last year”s budget, $1.5 million in projected revenue from extended hours at state liquor stores, and higher fees, including a 5 percent increase for use of state parks.
“Throughout this difficult process, I made a determined effort to keep these budget cuts from impacting the most vulnerable citizens,” said Mr. Kaine, a Democrat.
Mr. Kaine also plans to return 5 percent of his annual salary and defer pay raises to administration staffers. He also proposed a 5 percent reduction in some grants for museums and parks.
Republicans applauded Mr. Kaine’s proposed executive cuts worth $300 million but disagreed with his plan to take roughly $300 million from the state’s $1.2 billion Revenue Stabilization Fund, commonly referred to as the “rainy-day fund.”
They said Mr. Kaine is wrong to pin the shortfall solely on a shaky housing market, lagging sales- and income-tax receipts and a higher-than-expected number of land-conservation tax credits.
“It is inappropriate to use the state”s rainy-day fund to address nearly $300 million in forecasting errors, without which the shortfall would be too minimal to allow for such a withdrawal,” said Delegate Vincent F. Callahan Jr., Fairfax County Republican and House Appropriations Committee chairman.
Mr. Callahan argued that the state should dip into the emergency fund only during an economic “downpour,” not a “drizzle.”
Mr. Kaine characterized the situation as an “economic reality” and “cold, hard math.”
He said he is proposing to use the rainy-day fund “in the precise manner the constitution intended, or it”s going to be more cuts.”
Mr. Kaine will tell state lawmakers in December exactly how much he plans to borrow from the fund.
Until then, Republican lawmakers will explore a range of cost-saving measures, including strategies for state agencies that the governor requested this summer.
Mr. Kaine likely will make his final recommendation on borrowing from the fund at about the same time he announces his proposed 2009-10 biennial budget, which is expected to include his $75 million plan to expand preschool to all 4-year-olds.
The disagreement over the proper use of the fund and Mr. Kaine”s pre-kindergarten initiative could lead to a legislative battle after the Nov. 6 election, in which all 140 General Assembly seats are open.
“We do not think it would be prudent to reduce state support for our colleges and universities by $86 million while simultaneously expanding the pre-K program by $75 million to $100 million,” said House Speaker William J. Howell, Stafford County Republican. “This would be tantamount to raising tuition on middle-class Virginians in order to launch a new initiative, albeit one touted by then-Lieutenant Governor Kaine in his 2005 campaign.”
State Sen. Kenneth Thomas Cuccinelli II, Fairfax County Republican, said he agreed with the layoffs.
“Particularly when you have a slowdown like this, it is an opportunity to prioritize the positions,” he said.
As for pulling $300 million from the rainy-day fund, Mr. Cuccinelli said, “that number strikes me as very high, particularly when there is a long way between now and June.”